Rock LaManna01.13.15
When a business owner decides to sell a business, a valuation is typically required. That may be common knowledge, but what’s not always well-understood are the various usages for a valuation – regardless of whether or not you’re selling a business.
While there are multiple benefits to getting a business valuation, here are four that top my list:
1. It’s going to happen at some point. There’s no denying that there is some subjectivity to a business valuation. At some point in the sales process, an investor or even the IRS may decide to order a valuation. It’s in your best interest to conduct an independent business valuation to ensure the numbers are grounded in reality. It will provide an agreed-upon starting point for negotiations.
2. It’s the springboard for retirement planning. I encourage owners to get an independent business valuation done before they begin the sales process. Why? It can provide a roadmap to your retirement. I’m amazed at how many people don’t start their retirement planning without thinking about their financial situation. Before you can even think about the next phase in your life, you need to understand what funds will be available. An independent business valuation will provide you with an accurate assessment of the present so you can plan for the future. From there, you can get realistic about what your next steps should be.
3. It’s the launchpad for your company’s next move. Not only can a business valuation give you insight into life after you leave the company, it also clearly defines the next strategic move for your business. How many decisions are made based on hunches and so-called educated guesses? With an independent business valuation in hand, you can accurately define where the company should focus its efforts to build solid, profitable growth.
4. It resolves conflicts before they happen. Many businesses tend to be family-held. Conflicts and power struggles arise when family members don’t see eye-to-eye on strategies or succession plans. A clear business valuation strips away the mystery behind a business. It provides transparency that family members or partners need to fully grasp the specifics of the situation.
One word of caution: If you’re going to get a business valuation, be sure to use an independent appraiser. There are vested interests with the sales of any business. By going with an independent party, you reduce the obvious bias that can result from a hand-picked appraiser. It’s the only way you assure everyone is on the same page.
Rock LaManna helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. He is President and CEO of the LaManna Alliance, and provides guidance on how to grow a printing business, merge with a synergistic partner, make a strategic acquisition, or create a succession plan. Rock can be reached by email at Rock@RockLaManna.com.
While there are multiple benefits to getting a business valuation, here are four that top my list:
1. It’s going to happen at some point. There’s no denying that there is some subjectivity to a business valuation. At some point in the sales process, an investor or even the IRS may decide to order a valuation. It’s in your best interest to conduct an independent business valuation to ensure the numbers are grounded in reality. It will provide an agreed-upon starting point for negotiations.
2. It’s the springboard for retirement planning. I encourage owners to get an independent business valuation done before they begin the sales process. Why? It can provide a roadmap to your retirement. I’m amazed at how many people don’t start their retirement planning without thinking about their financial situation. Before you can even think about the next phase in your life, you need to understand what funds will be available. An independent business valuation will provide you with an accurate assessment of the present so you can plan for the future. From there, you can get realistic about what your next steps should be.
3. It’s the launchpad for your company’s next move. Not only can a business valuation give you insight into life after you leave the company, it also clearly defines the next strategic move for your business. How many decisions are made based on hunches and so-called educated guesses? With an independent business valuation in hand, you can accurately define where the company should focus its efforts to build solid, profitable growth.
4. It resolves conflicts before they happen. Many businesses tend to be family-held. Conflicts and power struggles arise when family members don’t see eye-to-eye on strategies or succession plans. A clear business valuation strips away the mystery behind a business. It provides transparency that family members or partners need to fully grasp the specifics of the situation.
One word of caution: If you’re going to get a business valuation, be sure to use an independent appraiser. There are vested interests with the sales of any business. By going with an independent party, you reduce the obvious bias that can result from a hand-picked appraiser. It’s the only way you assure everyone is on the same page.
Rock LaManna helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. He is President and CEO of the LaManna Alliance, and provides guidance on how to grow a printing business, merge with a synergistic partner, make a strategic acquisition, or create a succession plan. Rock can be reached by email at Rock@RockLaManna.com.
Rock LaManna helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. He is President and CEO of the LaManna Alliance, and provides guidance on how to grow a printing business, merge with a synergistic partner, make a strategic acquisition, or create a succession plan. Rock can be reached by email at Rock@RockLaManna.com.